medlmmune report
MedImmune - Analysis and Report
Situation Analysis
In United States, flu vaccine market is dominated by three companies producing about 80 million does every year. Entry barrier level is extremely high because of the advanced technology involved and complicated legal procedures. So far, despite FluMist, which is a brand new type of flu vaccine, there is no substitute for traditional vaccine. Before the launch of FluMist, buyer power is low because they can only consume traditional vaccine, which is offered at similar prices at most places. (Appx. B) MedImmune, who is about to introduce FluMist, owns the patent of this new technology, which eliminates competitions. The occasional shortage in the past is a perfect opportunity for FluMist to get into the market, since consumers would be forced to try this new vaccine because there will be no other options. On the other hand, they are able to define a new market segment with those afraid or choose not to take injection when possible. However, the cost of FluMist is almost two times higher than traditional vaccine; when it is produced at a lower volume, direct product cost can go up to more than $15. Furthermore, the market is limited to the population that is healthy from 5 to 49; the vaccination rate is only 10% in this population. (Appx. A)
Problem Definition
The underlying problem is that direct product cost of FluMist is too high to compete with the current available products. FluMist’s production period is considerably long. From 2002 to 2003 winter, only 4-6 million vaccines will be produced. The only way to lower cost is to product at a higher volume; nonetheless, the potential demand is only 15.9 million (Appx. 3), whereas the maximum production capacity is 50 million. Such high cost not only affect sales but also profitability. Net income falls by 28% with increased COGS, R&D, and SG&A. These costs went to FluMist production, acquisition of Aviron Inc., ongoing researches and advertising fee for
Situation Analysis
In United States, flu vaccine market is dominated by three companies producing about 80 million does every year. Entry barrier level is extremely high because of the advanced technology involved and complicated legal procedures. So far, despite FluMist, which is a brand new type of flu vaccine, there is no substitute for traditional vaccine. Before the launch of FluMist, buyer power is low because they can only consume traditional vaccine, which is offered at similar prices at most places. (Appx. B) MedImmune, who is about to introduce FluMist, owns the patent of this new technology, which eliminates competitions. The occasional shortage in the past is a perfect opportunity for FluMist to get into the market, since consumers would be forced to try this new vaccine because there will be no other options. On the other hand, they are able to define a new market segment with those afraid or choose not to take injection when possible. However, the cost of FluMist is almost two times higher than traditional vaccine; when it is produced at a lower volume, direct product cost can go up to more than $15. Furthermore, the market is limited to the population that is healthy from 5 to 49; the vaccination rate is only 10% in this population. (Appx. A)
Problem Definition
The underlying problem is that direct product cost of FluMist is too high to compete with the current available products. FluMist’s production period is considerably long. From 2002 to 2003 winter, only 4-6 million vaccines will be produced. The only way to lower cost is to product at a higher volume; nonetheless, the potential demand is only 15.9 million (Appx. 3), whereas the maximum production capacity is 50 million. Such high cost not only affect sales but also profitability. Net income falls by 28% with increased COGS, R&D, and SG&A. These costs went to FluMist production, acquisition of Aviron Inc., ongoing researches and advertising fee for